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1(Slip Opinion) OCTOBER TERM, 2005
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as isbeing done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has beenprepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
WAGNON, SECRETARY, KANSAS DEPARTMENT OF
REVENUE v. PRAIRIE BAND POTAWATOMI NATION
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FORTHE TENTH CIRCUIT
No. 04–631. Argued October 3, 2005—Decided December 6, 2005
Kansas’ motor fuel tax applies to the receipt of fuel by off-reservation
non-Indian distributors who subsequently deliver it to the gas station
owned by, and located on the Reservation of, the Prairie Band Po-
tawatomi Nation (Nation). The station is meant to accommodate res-
ervation traffic, including patrons driving to the casino the Nation
owns and operates there. Most of the station’s fuel is sold to such pa-
trons, but some sales are made to persons living or working on the
reservation. The Nation’s own tax on the station’s fuel sales gener-
ates revenue for reservation infrastructure. The Nation sued for de-
claratory judgment and injunctive relief from the State’s collection of
its tax from distributors delivering fuel to the reservation. Grantingthe State summary judgment, the District Court determined that the
balance of state, federal, and tribal interests tilted in favor of the
State under the test set forth in White Mountain Apache Tribe v.
Bracker, 448 U. S. 136. The Tenth Circuit reversed, agreeing with the
Nation that the Kansas tax is an impermissible affront to its sover-
eignty. The court reasoned that the Nation’s fuel revenues were de-
rived from value generated primarily on its reservation— i.e., the
creation of a new fuel market by virtue of the casino—and that the
Nation’s interests in taxing this reservation-created value to raise
revenue for reservation infrastructure outweighed the State’s general
interest in raising revenues.
Held: Because Kansas’ motor fuel tax is a nondiscriminatory tax im-
posed on an off-reservation transaction between non-Indians, the tax
is valid and poses no affront to the Nation’s sovereignty. The Brackerinterest-balancing test does not apply to a tax that results from an
off-reservation transaction between non-Indians. Pp. 4–18.
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2 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Syllabus
1. The Kansas tax is imposed on non-Indian distributors based
upon their off-reservation receipt of motor fuel, not on the on-
reservation sale and delivery of that fuel. Pp. 4–12.
(a) Under this Court’s Indian tax immunity cases, the “who” and
the “where” of a challenged tax have significant consequences. “The
initial and frequently dispositive question . . . is who bears [a tax’s]
legal incidence,” Oklahoma Tax Comm’n v. Chickasaw Nation, 515
U. S. 450, 458 (emphasis added). Moreover, the States are categorically
barred from placing a tax’s legal incidence “on a tribe or on tribal mem-
bers for sales made inside Indian country” without congressional au-
thorization. Id., at 459 (emphasis added). Even when a State imposes a
tax’s legal incidence on a non-Indian seller, the tax may nonetheless be
pre-empted if the transaction giving rise to tax liability occurs on the
reservation and the imposition of the tax fails to satisfy the Bracker in-terest-balancing test. See, e.g., Central Machinery Co. v. Arizona Tax
Comm’n, 448 U. S. 160. Pp. 4–5.
(b) The Court rejects the Nation’s argument that it is entitled to
prevail under Chickasaw’s categorical bar because the fairest reading
of the Kansas statute is that the tax’s legal incidence actually falls on
the Tribe on the reservation. Under the statute, the tax’s incidence is
expressly imposed on the distributor that first receives the fuel. Such
“dispositive language” from the state legislature is determinative of
who bears a state excise tax’s legal incidence. Chickasaw, supra, at
461. Even absent such “dispositive language,” the Court would none-
theless conclude that the tax’s legal incidence is on the distributor be-
cause Kansas law makes clear that it is the distributor, not the re-
tailer, that is liable for the tax. The lower courts and the Kansas
agency charged with administering the motor fuel tax reached thesame conclusion. Kaul v. Kansas Dept. of Revenue, 266 Kan. 464, 970
P. 2d 60, distinguished. Pp. 5–8.
(c) Also rejected is the Nation’s alternative argument that the
Bracker test must be applied irrespective of who bears the Kansas
tax’s legal incidence because the tax arises as a result of the on-
reservation sale and delivery of fuel. The Nation presented a starkly
different, and correct, interpretation of the statute in the Tenth Cir-
cuit, arguing that the balancing test is appropriate even though the
tax’s legal incidence is imposed on the Nation’s non-Indian distribu-
tor and is triggered by the distributor’s receipt of fuel outside the res-
ervation. The Nation’s argument here is rebutted by provisions of the
Kansas statute demonstrating that the only taxable event occurs
when the distributor first receives the fuel and by a final determina-
tion by the State reaching the same conclusion. The Nation’s theory
that the existence of statutory deductions for certain postreceipt
transactions make it impossible for a distributor to calculate its ulti-
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Cite as: 546 U. S. ____ (2005) 3
Syllabus
mate tax liability without knowing whether, where, and to whom the
fuel is ultimately sold or delivered suffers from several conceptual de-
fects. For example, availability of the deductions does not change the
nature of the taxable event, the distributor’s receipt of the fuel. Pp.
8–12.
2. The Tenth Circuit erred in concluding that the Kansas tax is
nevertheless subject to Bracker’s test. That test applies only where
“a State asserts authority over the conduct of non-Indians engaging
in activity on the reservation.” 448 U. S., at 144. It has never been
applied where, as here, a state tax imposed on a non-Indian arises
from a transaction occurring off the reservation. The Court’s Indian
tax immunity cases counsel against such an application. Pp. 12–18.
(a) Limiting the Bracker test exclusively to on-reservation trans-
actions between a nontribal entity and a tribe or tribal member isconsistent with this Court’s unique Indian tax immunity jurispru-
dence, which relies “heavily on the doctrine of tribal sovereignty [giv-
ing] state law ‘no role to play’ within a tribe’s territorial boundaries,”
Oklahoma Tax Comm’n v. Sac and Fox Nation, 508 U. S. 114, 123–
124. The Court has taken an altogether different course, by contrast,
when a State asserts its taxing authority outside of Indian Country.
E.g., Chickasaw, 515 U. S. 450. In such cases, “[a]bsent express fed-
eral law to the contrary, Indians going beyond reservation boundaries
have generally been held subject to non-discriminatory state law oth-
erwise applicable to all citizens of the State.” Mescalero Apache Tribe
v. Jones, 411 U. S. 145, 148–149. If a State may apply a nondis-
criminatory tax to Indians who have gone beyond the reservation’s
boundaries, it may also apply a nondiscriminatory tax where, as
here, the tax is imposed on non-Indians as a result of an off-reservation transaction. In these circumstances, Bracker is inappli-
cable. Cf. Arizona Dept. of Revenue v. Blaze Constr. Co., 526 U. S. 32,
37. The application of the test here is also inconsistent with the
Court’s efforts to establish “bright line standard[s]” in the tax ad-
ministration context. Ibid. The Nation is not entitled to interest
balancing by virtue of its claim that the Kansas tax interferes with
the Nation’s own motor fuel tax. This is ultimately a complaint about
the state tax’s downstream economic consequences. The Nation can-
not invalidate that tax by complaining about a decrease in its reve-
nues. See, e.g., Washington v. Confederated Tribes of Colville Reserva-
tion, 447 U. S. 134, 156. Nor would the Court’s analysis change if
legal significance were accorded the Nation’s decision to label a por-
tion of its gas station’s revenues as tax proceeds. See id., at 184, n. 9.
Pp. 12–17.
(b) This Court rejects the Nation’s contention that the Kansas
tax is invalid notwithstanding the Bracker test’s inapplicability be-
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4 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Syllabus
cause it exempts from taxation fuel sold or delivered to state and fed-
eral sovereigns and is therefore impermissibly discriminatory. The
Nation is not similarly situated to the exempted sovereigns. While
Kansas’ tax pays for roads and bridges on the Nation’s reservation,
including the main highway used by casino patrons, Kansas offers no
such services to the several States or the Federal Government.
Moreover, to the extent Kansas retailers bear the tax’s cost, that
burden applies equally to all retailers within the State regardless of
whether they are located on a reservation. P. 18.
379 F. 3d 979, reversed.
THOMAS, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and STEVENS, O’CONNOR, SCALIA , SOUTER, and BREYER, JJ., joined.
GINSBURG, J., filed a dissenting opinion, in which K ENNEDY , J., joined.
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_________________
_________________
Cite as: 546 U. S. ____ (2005) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in thepreliminary print of the United States Reports. Readers are requested tonotify the Reporter of Decisions, Supreme Court of the United States, Wash-ington, D. C. 20543, of any typographical or other formal errors, in orderthat corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 04–631
JOAN WAGNON, SECRETARY, KANSAS DEPART-
MENT OF REVENUE, PETITIONER v. PRAIRIE
BAND POTAWATOMI NATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[December 6, 2005]
JUSTICE THOMAS delivered the opinion of the Court.
The State of Kansas imposes a tax on the receipt of
motor fuel by fuel distributors within its boundaries.
Kansas applies that tax to motor fuel received by non-
Indian fuel distributors who subsequently deliver that fuel
to a gas station owned by, and located on, the Reservation
of the Prairie Band Potawatomi Nation (Nation). The
Nation maintains that this application of the Kansasmotor fuel tax is an impermissible affront to its sover-
eignty. The Court of Appeals agreed, holding that the
application of the Kansas tax to fuel received by a non-
Indian distributor, but subsequently delivered to the
Nation, was invalid under the interest-balancing test set
forth in White Mountain Apache Tribe v. Bracker, 448 U. S.
136 (1980). But the Bracker interest-balancing test applies
only where “a State asserts authority over the conduct of
non-Indians engaging in activity on the reservation.” Id., at
144. It does not apply where, as here, a state tax is imposed
on a non-Indian and arises as a result of a transaction that
occurs off the reservation. Accordingly, we reverse.
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2 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
I
The Nation is a federally recognized Indian Tribe whose
reservation is on United States trust land in Jackson
County, Kansas. The Nation owns and operates a casino
on its reservation. In order to accommodate casino pa-
trons and other reservation-related traffic, the Nation
constructed, and now owns and operates, a gas station on
its reservation next to the casino. Seventy-three percent
of the station’s fuel sales are made to casino patrons, while
11 percent of the station’s fuel sales are made to persons
who live or work on the reservation. The Nation pur-
chases fuel for its gas station from non-Indian distributors
located off its reservation. Those distributors pay a state
fuel tax on their initial receipt of motor fuel, Kan. Stat.
Ann. §79–3408 (2003 Cum. Supp.),1 and pass along the
cost of that tax to their customers, including the Nation.2
The Nation sells its fuel within 2 cents per gallon of the
prevailing market price. Prairie Band Potawatomi Nation
v. Richards, 379 F. 3d 979, 982 (CA10 2004). It does so
notwithstanding the distributor’s decision to pass along
the cost of the State’s fuel tax to the Nation, and the Na-
tion’s decision to impose its own tax on the station’s fuel
sales in the amount of 16 cents per gallon of gasoline and18 cents per gallon of diesel (increased to 20 cents for
gasoline and 22 cents for diesel in January 2003). Id., at
982. The Nation’s fuel tax generates approximately
——————
1 The Kansas Legislature recently amended the fuel tax statute. 2005
Kan. Sess. Laws ch. 46. The text of the sections to which we refer
remains the same, although the subsection numbers have changed. For
consistency, our subsection references are to the 2003 version applied
by the lower courts and cited by the parties.2 The record does not clearly establish whether the distributor passed
along the cost of the tax to the Nation’s gas station. At oral argument,
petitioner acknowledged that the record was unclear, but representedthat the distributor was in fact passing along the cost of the tax to the
Nation.
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3Cite as: 546 U. S. ____ (2005)
Opinion of the Court
$300,000 annually, funds that the Nation uses for “ ‘con-
structing and maintaining roads, bridges and rights-of-
way located on or near the Reservation,’ ” including the
access road between the state-funded highway and the
casino. Ibid.
The Nation brought an action in Federal District Court
for declaratory judgment and injunctive relief from the
State’s collection of motor fuel tax from distributors who
deliver fuel to the reservation. The District Court granted
summary judgment in favor of the State. Applying the
Bracker interest-balancing test, it determined that the
balance of state, federal, and tribal interests tilted in favorof the State. The court reached this determination be-
cause “it is undisputed that the legal incidence of the tax
is directed off-reservation at the fuel distributors,” Prairie
Band Potawatomi Nation v. Richards, 241 F. Supp. 2d
1295, 1311 (Kan. 2003), and because the ultimate pur-
chasers of the fuel, non-Indian casino patrons, receive the
bulk of their governmental services from the State, id., at
1309. The court held that the State’s tax did not interfere
with the Nation’s right of self-government, adding that “a
tribe cannot oust a state from any power to tax on-
reservation purchases by nonmembers of the tribe bysimply imposing its own tax on the transactions or by
otherwise earning its revenues from the tribal business.”
Id., at 1311.
The Court of Appeals for the Tenth Circuit reversed.
379 F. 3d 979 (2004). It determined that, under Bracker,
the balance of state, federal, and tribal interests favored
the Tribe. The Tenth Circuit reasoned that the Nation’s
fuel revenues were “derived from value generated primar-
ily on its reservation,” 379 F. 3d, at 984—namely, the
creation of a new fuel market by virtue of the presence of
the casino—and that the Nation’s interests in taxing this
reservation-created value to raise revenue for reservationinfrastructure outweighed the State’s “general interest in
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4 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
raising revenues,” id., at 986. We granted certiorari, 543
U. S. 1186 (2005), and now reverse.
II
Although we granted certiorari to determine whether
Kansas may tax a non-Indian distributor’s off-reservation
receipt of fuel without being subject to the Bracker inter-
est-balancing test, Pet. for Cert. i, the Nation maintains
that Kansas’ “tax is imposed not on the off-reservation
receipt of fuel, but on its on-reservation sale and delivery,”
Brief for Respondent 11 (emphasis in original). As the
Nation recognizes, under our Indian tax immunity cases,the “who” and the “where” of the challenged tax have
significant consequences. We have determined that “[t]he
initial and frequently dispositive question in Indian tax
cases . . . is who bears the legal incidence of [the] tax,”
Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U. S. 450,
458 (1995) (emphasis added), and that the States are cate-
gorically barred from placing the legal incidence of an excise
tax “on a tribe or on tribal members for sales made inside
Indian country” without congressional authorization, id., at
459 (emphasis added). We have further determined that,
even when a State imposes the legal incidence of its tax on a
non-Indian seller, the tax may nonetheless be pre-empted if
the transaction giving rise to tax liability occurs on the
reservation and the imposition of the tax fails to satisfy the
Bracker interest-balancing test. See 448 U. S. 136 (holding
that state taxes imposed on on-reservation logging and
hauling operations by non-Indian contractor are invalid
under the interest-balancing test); cf. Central Machinery Co.
v. Arizona Tax Comm’n, 448 U. S. 160 (1980) (holding that
the Indian trader statutes pre-empted Arizona’s tax on a
non-Indian seller’s on-reservation sales).
The Nation maintains that it is entitled to prevail under
the categorical bar articulated in Chickasaw because“[t]he fairest reading of the statute is that the legal inci-
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5Cite as: 546 U. S. ____ (2005)
Opinion of the Court
dence of the tax actually falls on the Tribe [on the reserva-
tion].” Brief for Respondent 17, n. 5. The Nation alterna-
tively maintains it is entitled to prevail even if the legal
incidence of the tax is on the non-Indian distributor be-
cause, according to the Nation, the tax arises out of a
distributor’s on-reservation transaction with the Tribe and
is therefore subject to the Bracker balancing test. Brief for
Respondent 15. We address the “who” and the “where” of
Kansas’ motor fuel tax in turn.
A
Kansas law specifies that “the incidence of [the motorfuel] tax is imposed on the distributor of the first receipt of
the motor fuel.” Kan. Stat. Ann. §79–3408(c) (2003 Cum.
Supp.). We have suggested that such “dispositive lan-
guage” from the state legislature is determinative of who
bears the legal incidence of a state excise tax. Chickasaw,
supra, at 461. But even if the state legislature had not
employed such “dispositive language,” thereby requiring
us instead to look to a “fair interpretation of the taxing
statute as written and applied,” California Bd. of Equaliza-
tion v. Chemehuevi Tribe, 474 U. S. 9, 11 (1985) (per cu-
riam), we would nonetheless conclude that the legal inci-
dence of the tax is on the distributor.
Kansas law makes clear that it is the distributor, rather
than the retailer, that is liable to pay the motor fuel tax.
Section 79–3410(a) (1997) provides, in relevant part, that
“[e]very distributor . . . shall compute and shall pay to the
director . . . the amount of [motor fuel] taxes due to the
state.” While the distributors are “entitled” to pass along
the cost of the tax to downstream purchasers, see §79–
3409 (2003 Cum. Supp.), they are not required to do so. In
sum, the legal incidence of the Kansas motor fuel tax is on
the distributor. The lower courts reached the same con-
clusion. 379 F. 3d, at 982 (“The Kansas legislature struc-tured the tax so that its legal incidence is placed on non-
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6 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
Indian distributors”); 241 F. Supp. 2d, at 1311 (“[I]t is
undisputed that the legal incidence of the tax is directed
off-reservation at the fuel distributors”); see also Sac and
Fox Nation of Missouri v. Pierce, 213 F. 3d 566, 578 (CA10
2000) (“[T]he legal incidence of the [Kansas] tax law as
presently written falls on the fuel distributors rather than
on the Tribes”); Winnebago Tribe of Nebraska v. Kline, 297
F. Supp. 2d 1291, 1294 (Kan. 2004) (“Under the Kansas
statutory scheme, the legal incidence of the state’s fuel tax
falls on the ‘distributor of first receipt’ of such fuel”); Sac
and Fox Nation of Missouri v. LaFaver, 31 F. Supp. 2d
1298, 1307 (Kan. 1998) (“[T]he statutes are extremelyclear in providing that the tax in question is imposed upon
the distributor”). And the Kansas Department of Reve-
nue, the state agency charged with administering the
motor fuel tax, has concluded likewise. See Letter from
David J. Heinemann, Office of Administrative Appeals, to
Mark Burghart, Written Final Determination in Request
for Informal Conference for Reconsideration of Agency
Action, Davies Oil Co., Inc., Docket No. 01–970 (Jan. 3,
2002) (hereinafter Kansas Dept. of Revenue Letter) (“The
legal incidence of the Kansas fuel tax rests with Davies,
the distributor, who is up-stream from Nation, theretailer”).
The United States, as amicus, contends that this conclu-
sion is foreclosed by the Kansas Supreme Court’s decision
in Kaul v. Kansas Dept. of Revenue, 266 Kan. 464, 970
P. 2d 60 (1998). The United States reads Kaul as holding
that the legal incidence of Kansas’ motor fuel tax rests on
the Indian retailers, rather than on the non-Indian dis-
tributors. And, under the United States’ view, so long as
the Kansas Supreme Court’s “ ‘definitive determination as
to the operating incidence’ ” of its fuel tax is “ ‘consistent
with the statute’s reasonable interpretation,’ ” it should be
“ ‘deemed conclusive.’ ” Brief for United States as AmicusCuriae 10 (quoting Gurley v. Rhoden, 421 U. S. 200, 208
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7Cite as: 546 U. S. ____ (2005)
Opinion of the Court
(1975)).
We disagree with the United States’ interpretation of
Kaul. In Kaul, two members of the Citizen Band Potawa-
tomi Tribe of Oklahoma sought to enjoin the enforcement
of Kansas’ fuel tax on fuel delivered to their gas station
located on the Prairie Band Potawatomi Tribe of Kansas’
Reservation. The Kansas Supreme Court determined that
the station owners had standing to challenge the tax
because the statute provided that the distributor was
entitled to “ ‘charge and collect such tax . . . as a part of the
selling price.’ ” Kaul, supra, at 474, 970 P. 2d, at 67 (quot-
ing Kan. Stat. Ann. §79–3409 (1995); emphasis deleted).The court determined that the station owners were not
entitled to an injunction, however, because they were not
members of a Kansas Tribe and thus there had “been no
showing by Retailers that payment of fuel tax to Kansas
interferes with the self-government of a Kansas tribe or a
Kansas tribal member.” 266 Kan., at 464, 970 P. 2d, at 69.
The court then noted that “the legal incidence of the tax on
motor fuel rests on nontribal members and does not affect
the Potawatomi Indian reservation within the state of
Kansas.” Ibid.
Kaul does not foreclose our determination that thedistributor bears the legal incidence of the Kansas motor
fuel tax. As an initial matter, it is unclear whether the
court’s reference to “nontribal members” is a reference to
the non-tribal-member retailers or the non-tribal-member
distributors. At the very least, Kaul’s imprecise language
cannot be characterized as a definitive determination.
Moreover, the 1998 amendments to the Kansas fuel provi-
sions, including the amendment to §79–3408(c) that pro-
vides that “the incidence of this tax is imposed on the
distributor,” were not applied in Kaul. Id.,at 473, 970
P. 2d, at 66 (identifying provisions that were repealed in
1998 as being “in effect during the period relevant to thiscase”); id., at 474, 970 P. 2d, at 67 (noting that a “critical
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8 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
statute” to its holding was the 1995 version of §79–3409,
which was amended in 1998). Accordingly, Kaul did not
speak authoritatively on the provisions before us today.
B
The Nation maintains that we must apply the Bracker
interest-balancing test, irrespective of the identity of the
taxpayer (i.e., the party bearing the legal incidence), be-
cause the Kansas fuel tax arises as a result of the on-
reservation sale and delivery of the motor fuel. See Brief
for Respondent 15. Notably, however, the Nation pre-
sented a starkly different interpretation of the statute inthe proceedings before the Court of Appeals, arguing that
“[t]he balancing test is appropriate even though the legal
incidence of the tax is imposed on the Nation’s non-Indian
distributor and is triggered by the distributor’s receipt of
fuel outside the reservation.” Appellant’s Reply Brief in
No. 03–3218 (CA10), p. 3 (emphasis added); see also 241
F. Supp. 2d, at 1311 (District Court observing that “it is
undisputed that the legal incidence of the tax is directed off-
reservation at the fuel distributors”). A “fair interpretation
of the taxing statute as written and applied,” Chemehuevi
Tribe, 474 U. S., at 11, confirms that the Nation’s interpre-
tation of the statute before the Court of Appeals was correct.
As written, the Kansas fuel tax provisions state that “the
incidence of this tax is imposed on the distributor of the
first receipt of the motor fuel and such taxes shall be paid
but once. Such tax shall be computed on all motor-vehicle
fuels or special fuels received by each distributor, manu-
facturer or importer in this state and paid in the manner
provided for herein . . . .” Kan. Stat. Ann. §79–3408(c)
(2003 Cum. Supp.). Under this provision, the distributor
who initially receives the motor fuel is liable for payment
of the fuel tax, and the distributor’s tax liability is deter-
mined by calculating the amount of fuel received by thedistributor.
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9Cite as: 546 U. S. ____ (2005)
Opinion of the Court
Section 79–3410(a) (1997) confirms that it is the dis-
tributor’s off-reservation receipt of the motor fuel, and not
any subsequent event, that establishes tax liability. That
section provides:
“[E]very distributor, manufacturer, importer, exporter
or retailer of motor-vehicle fuels or special fuels, on or
before the 25th day of each month, shall render to the
director . . . a report certified to be true and correct
showing the number of gallons of motor-vehicle fuels
or special fuels received by such distributor, manufac-
turer, importer, exporter or retailer during the preced-
ing calendar month . . . . Every distributor, manufac-
turer or importer within the time herein fixed for the
rendering of such reports, shall compute and shall pay
to the director at the director's office the amount of
taxes due to the state on all motor-vehicle fuels or
special fuels received by such distributor, manufac-
turer or importer during the preceding calendar
month.”
Thus, Kansas law expressly provides that a distributor’s
monthly tax obligations are determined by the amount of
fuel received by the distributor during the preceding
month. See Kline, 297 F. Supp. 2d, at 1294 (“The distribu-
tor must compute and remit the tax each month for the fuel
received by the distributor in the State of Kansas”).
The Nation disagrees. It contends that what is taxed is
not the distributors’ (off-reservation) receipt of the fuel,
but rather the distributors’ use, sale, or delivery of the
motor fuel—in this case, the distributors’ (on-reservation)
sale or delivery to the Nation. The Nation grounds sup-
port for this proposition in §79–3408(a) (2003 Cum.
Supp.). That section provides that “[a] tax . . . is hereby
imposed on the use, sale or delivery of all motor vehicle
fuels or special fuels which are used, sold or delivered inthis state for any purpose whatsoever.” But this section
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10 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
cannot be read in isolation. If it were, it would permit
Kansas to tax the same fuel multiple times—namely,
every time fuel is sold, delivered, or used. Section 79–
3408(a) must be read in conjunction with subsection (c),
which specifies that “the incidence of this tax is imposed
on the distributor of the first receipt of the motor fuel and
such taxes shall be paid but once.” (Emphasis added.) The
identity of the single, taxable event is revealed in the very
next sentence of subsection (c), which provides that “[s]uch
tax shall be computed on all . . . fuels received by each
distributor.” (Emphasis added.) In short, the “use, sale or
delivery” that triggers tax liability is the sale or delivery of the fuel to the distributor. The Kansas Department of
Revenue has issued a final determination reaching the
same conclusion. See Kansas Dept. of Revenue Letter
(“[P]ursuant to the Kansas Motor Fuel Tax Act . . . the state
fuel tax was imposed on Davies, a distributor, when Davies
first received the fuel at its business, a site located off of
Nation’s reservation” (emphasis added)).
The Nation claims further support for its interpretation
of the statute in §79–3408(d) (2003 Cum. Supp.). Section
79–3408(d) permits distributors to obtain deductions from
the Kansas motor fuel tax for certain postreceipt transac-tions, such as sale or delivery of fuel for export from the
State and sale or delivery of fuel to the United States.
§§79–3408(d)(1)–(2). The Nation argues that these ex-
emptions make it impossible for a distributor to calculate
its “ultimate tax liability” without knowing “whether,
where, and to whom the fuel is ultimately sold or deliv-
ered.” Brief for Respondent 15. The Nation infers from
these provisions that the taxable event is actually the
distributors’ postreceipt delivery of fuel to retailers such
as the Nation, rather than the distributors’ initial receipt
of the fuel.
The Nation’s theory suffers from a number of conceptualdefects. First, under Kansas law, a distributor must pay
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11Cite as: 546 U. S. ____ (2005)
Opinion of the Court
the tax even for fuel that sits in its inventory—fuel that is
not (or at least has not yet been) used, sold, or delivered by
the distributor.3 But the Nation’s interpretation presumes
that the tax is owed only on a distributor’s postreceipt use,
sale, or delivery of fuel. As this interpretation cannot be
reconciled with the manner in which the Kansas motor
fuel tax is actually applied, it must be rejected.4 Second,
——————
3 This understanding of the application of the Kansas fuel tax is con-
firmed by the form that fuel distributors are required to fill out each
month pursuant to Kan. Stat. Ann. §79–3410 (1997). See Kansas Form
MF–52, available at http://www.ksrevenue.org/pdf/forms/mf52.pdf (asvisited Nov. 21, 2005, and available in Clerk of Court’s case file). The
form instructs distributors to enter in line 1 “the total net gallons of
gasoline, gasohol and special fuel received or imported” during the
preceding month. Id., at 2. The distributors may then “[e]nter the
deductions that apply to your business” in lines 2(a)-to-(e) for the
preceding month. Those deductions include “[n]et gallons of fuel
exported from Kansas,” “[n]et gallons of fuel sold to the U. S. Govern-
ment,” “[n]et gallons of fuel sold for aviation purposes,” and “[n]et
gallons of dyed diesel fuel received for the month,” the very deductions
described in §79–3408(d), ibid. (emphasis added). The distributor’s tax
liability is then calculated by subtracting the total deductions from the
total fuel received, and applying the 2.5 percent handling allowance to
the difference. Thus, the event that generates a distributor’s tax
liability is its receipt of fuel. And the distributor must pay tax on thatfuel even if it is not subsequently delivered or sold. While a distributor
may decrease its tax liability by engaging in transactions that entitle it
to deductions, such as by selling or delivering fuel to an exempt entity
like the United States, its tax liability is unaffected by sales or deliver-
ies to nonexempt entities like the Nation.4 Indeed, the dissent acknowledges that tax is owed on fuel a distribu-
tor receives and holds in inventory—and thus implicitly concedes that
the distributors’ off-reservation receipt of motor fuel is the event that
gives rise to tax liability. See post, at 5 (opinion of GINSBURG, J.).
While the dissent contends that such tax is ultimately “effectively
offset” by a subsequent delivery of the inventoried fuel, ibid., the
dissent does not explain the meaning of this opaque contention. A
distributor’s subsequent delivery of fuel to the Nation or any other fuel
retailer in Kansas has no effect on tax that it has already paid in apreceding month. Indeed, the distributor does not report delivery to
retailers on its monthly tax return. See Kansas Form MF–52. And a
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12 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
the availability of tax deductions does not change the
nature of the taxable event, here the distributor’s receipt
of the fuel. By analogy, an individual federal income
taxpayer may reduce his tax liability by paying home
mortgage interest. But that entitlement does not render
the taxable event anything other than the receipt of in-
come by the taxpayer. See 26 U. S. C. §1 (2000 ed. and
Supp. II), §163(h) (2000 ed.); cf. North American Oil Con-
sol. v. Burnet, 286 U. S. 417, 424 (1932) (federal income tax
liability arises when “a taxpayer . . . has received income”).
Finally, the Nation contends that its interpretation of
the statute is supported by Kan. Stat. Ann. §79–3417(1997), which permits a refund—in certain circum-
stances—for destroyed fuel. However, the Nation’s inter-
pretation is actually foreclosed by that section. Section
79–3417 entitles a distributor to a “refund from the state
of the amount of motor-vehicle fuels or special fuels tax
paid on any . . . fuels of 100 gallons or more in quantity,
which are lost or destroyed at any one time while such
distributor is the owner thereof,” provided the distributor
supplies the required notification and documentation to
the State. This section illustrates that a distributor pays
taxes for fuel in its possession that it has not delivered orsold, and is only entitled to the refund described in this
section for tax it has already paid on fuel that is subse-
quently destroyed. While this section does not specify the
event that gives rise to the distributor’s tax liability, it
forecloses the Nation’s contention that such liability does
not arise until fuel is sold or delivered to a nonexempt
entity.
III
Although Kansas’ fuel tax is imposed on non-Indian
distributors based upon those distributors’ off-reservation
—————— distributor must pay the tax even if the fuel is never delivered.
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Cite as: 546 U. S. ____ (2005) 13
Opinion of the Court
receipt of motor fuel, the Tenth Circuit concluded that the
tax was nevertheless still subject to the interest-balancing
test this Court set forth in Bracker, 448 U. S. 136. As
Bracker itself explained, however, we formulated the bal-
ancing test to address the “difficult questio[n]” that arises
when “a State asserts authority over the conduct of non-
Indians engaging in activity on the reservation.” Id., at 144–
145 (emphasis added). The Bracker interest-balancing test
has never been applied where, as here, the State asserts
its taxing authority over non-Indians off the reservation.
And although we have never addressed this precise issue,
our Indian tax immunity cases counsel against such anapplication.
A
We have applied the balancing test articulated in
Bracker only where “the legal incidence of the tax fell on a
nontribal entity engaged in a transaction with tribes or
tribal members,” Arizona Dept. of Revenue v. Blaze Constr.
Co., 526 U. S. 32, 37 (1999), on the reservation. See
Bracker, supra (motor carrier license and use fuel taxes
imposed on on-reservation logging and hauling operations
by non-Indian contractor); Department of Taxation and
Finance of N. Y. v. Milhelm Attea & Bros., 512 U. S. 61
(1994) (various taxes imposed on non-Indian purchasers of
goods retailed on-reservation); Cotton Petroleum Corp. v.
New Mexico, 490 U. S. 163 (1989) (state severance tax
imposed on non-Indian lessee’s on-reservation production
of oil and gas); Ramah Navajo School Bd., Inc. v. Bureau
of Revenue of N. M., 458 U. S. 832 (1982) (state gross
receipts tax imposed on private contractor’s proceeds from
the construction of a school on the reservation); Washing-
ton v. Confederated Tribes of Colville Reservation, 447
U. S. 134 (1980) (cigarette and sales taxes imposed on on-
reservation purchases by nonmembers); Central Machin-ery Co., 448 U. S. 160 (tax imposed on on-reservation sale
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14 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
of farm machinery to Tribe). Similarly, the cases identi-
fied in Bracker as supportive of the balancing test were
exclusively concerned with the on-reservation conduct of
non-Indians. See Warren Trading Post Co. v. Arizona Tax
Comm’n, 380 U. S. 685 (1965) (gross proceeds tax imposed
on non-Indian retailer on Navajo Indian Reservation);
Thomas v. Gay, 169 U. S. 264 (1898) (state property tax
imposed on cattle owned by non-Indian lessees of tribal
land); Williams v. Lee, 358 U. S. 217 (1959) (holding the
state courts lacked jurisdiction over dispute between non-
Indian, on-reservation retailer and Indian debtors).5
Limiting the interest-balancing test exclusively to on-reservation transactions between a nontribal entity and a
——————
5 Our recent discussion in Oklahoma Tax Comm’n v. Chickasaw Nation,
515 U. S. 450 (1995), regarding the application of the interest-balancing
test to motor fuel taxes is not to the contrary. In Chickasaw, we noted in
dicta that, “if the legal incidence of the tax rests on non-Indians, no
categorical bar prevents enforcement of the tax; if the balance of federal,
state, and tribal interests favors the State, and federal law is not to the
contrary, the state may impose its levy, and may place on a tribe or tribal
members ‘minimal burdens’ in collecting the toll.” Id., at 459 (citation
omitted). Chickasaw did not purport to expand the applicability of White
Mountain Apache Tribe v. Bracker, 448 U. S. 136 (1980), to an off-reservation tax on non-Indians. Indeed, the quoted sentence reveals that
Chickasaw discussed the applicability of the interest-balancing test in the
context of a tax that is collected by the tribe—a tax that necessarily arises
from on-reservation conduct.
Moreover, in purporting to craft a “ ‘bright-line standard’ ” in that case,
we noted that Oklahoma “generally is free” to impose the legal incidence
of its motor fuel tax on the consumer—who purchases fuel on the reserva-
tion—and then require the Indian retailers to “ ‘collect and remit the
levy.’ ” 515 U. S., at 460. If Oklahoma would have been free to impose
the legal incidence of its fuel tax downstream from the Indian retailers,
then Kansas should be equally free to impose the legal incidence of its
fuel tax upstream from Indian retailers notwithstanding the applicabil-
ity of the interest-balancing test. Indeed, the Chickasaw dicta should
apply a fortiori here; the upstream approach is less burdensome on theTribe because it does not include the collecting and remitting require-
ments that typically, and permissibly, accompany a consumer tax.
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15Cite as: 546 U. S. ____ (2005)
Opinion of the Court
tribe or tribal member is consistent with our unique In-
dian tax immunity jurisprudence. We have explained that
this jurisprudence relies “heavily on the doctrine of tribal
sovereignty . . . which historically gave state law ‘no role to
play’ within a tribe’s territorial boundaries.” Oklahoma
Tax Comm’n v. Sac and Fox Nation, 508 U. S. 114, 123–
124 (1993) (quoting McClanahan v. Arizona Tax Comm’n,
411 U. S. 164, 168 (1973)). We have further explained
that the doctrine of tribal sovereignty, which has a “sig-
nificant geographical component,” Bracker, supra, at 151,
requires us to “revers[e]” the “ ‘general rule’ ” that “ ‘exemp-
tions from tax laws should . . . be clearly expressed.’ ” Sacand Fox , supra, at 124 (quoting McClanahan, supra, at
176). And we have determined that the geographical
component of tribal sovereignty “ ‘provide[s] a backdrop
against which the applicable treaties and federal statutes
must be read.’” Sac and Fox , supra, at 124 (quoting
McClanahan, supra, at 172). Indeed, the particularized
inquiry we set forth in Bracker relied specifically on that
backdrop. See 448 U. S., at 144–145 (noting that where “a
State asserts authority over the conduct of non-Indians
engaging in activity on the reservation . . . we have exam-
ined the language of the relevant federal treaties andstatutes in terms of both the broad policies that underlie
them and the notions of sovereignty that have developed
from historical traditions of tribal independence” (empha-
sis added)).
We have taken an altogether different course, by con-
trast, when a State asserts its taxing authority outside of
Indian Country. Without applying the interest-balancing
test, we have permitted the taxation of the gross receipts
of an off-reservation, Indian-owned ski resort, Mescalero
Apache Tribe v. Jones, 411 U. S. 145 (1973), and the taxa-
tion of income earned by Indians working on-reservation
but living off-reservation, Chickasaw, 515 U. S. 450. Inthese cases, we have concluded that “[a]bsent express
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16 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
federal law to the contrary, Indians going beyond reserva-
tion boundaries have generally been held subject to non-
discriminatory state law otherwise applicable to all citi-
zens of the State.” Mescalero Apache, supra, at 148–149;
Chickasaw, supra, at 465 (quoting Mescalero Apache,
supra, at 148–149). If a State may apply a non-
discriminatory tax to Indians who have gone beyond the
boundaries of the reservation, then it follows that it may
apply a nondiscriminatory tax where, as here, the tax is
imposed on non-Indians as a result of an off-reservation
transaction. In these circumstances, the interest-
balancing test set forth in Bracker is inapplicable. Cf. Blaze Constr., 526 U. S., at 37 (declining to apply the
Bracker interest-balancing test “where a State seeks to tax
a transaction [on-reservation] between the Federal Gov-
ernment and its non-Indian private contractor”).
The application of the interest-balancing test to the
Kansas motor fuel tax is not only inconsistent with the
special geographic sovereignty concerns that gave rise to
that test, but also with our efforts to establish “bright-line
standard[s]” in the context of tax administration. Ibid.
(“The need to avoid litigation and to ensure efficient tax
administration counsels in favor of a bright-line standardfor taxation of federal contracts, regardless of whether the
contracted-for activity takes place on Indian reserva-
tions”); cf. Chickasaw, supra, at 460 (noting that the legal
incidence test “ ‘provide[s] a reasonably bright-line stan-
dard’ ”); County of Yakima v. Confederated Tribes and
Bands of Yakima Nation, 502 U. S. 251, 267–268 (1992).
Indeed, we have recognized that the Bracker interest-
balancing test “only cloud[s]” our efforts to establish such
standards. Blaze Constr., supra, at 37. Under the Na-
tion’s view, however, any off-reservation tax imposed on
the manufacture or sale of any good imported by the Na-
tion or one of its members would be subject to interestbalancing. Such an expansion of the application of the
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17Cite as: 546 U. S. ____ (2005)
Opinion of the Court
Bracker test is not supported by our cases.
Nor is the Nation entitled to interest balancing by virtue
of its claim that the Kansas motor fuel tax interferes with
its own motor fuel tax. As an initial matter, this is ulti-
mately a complaint about the downstream economic con-
sequences of the Kansas tax. As the owner of the station,
the Nation will keep every dollar it collects above its oper-
ating costs. Given that the Nation sells gas at prevailing
market rates, its decision to impose a tax should have no
effect on its net revenues from the operation of the station;
it should not matter whether those revenues are labeled
“profits” or “tax proceeds.” The Nation merely seeks toincrease those revenues by purchasing untaxed fuel. But
the Nation cannot invalidate the Kansas tax by complain-
ing about a decrease in revenues. See Colville, 447 U. S.,
at 156 (“Washington does not infringe the right of reserva-
tion Indians to ‘make their own laws and be ruled by
them,’ Williams v. Lee, 358 U. S. 217, 220 (1959), merely
because the result of imposing its taxes will be to deprive
the Tribes of revenues which they currently are receiv-
ing”). Nor would our analysis change if we accorded legal
significance to the Nation’s decision to label a portion of
the station’s revenues as tax proceeds. See id., at 184, n. 9(Rehnquist, J., concurring in part, concuring in result in
part, and dissenting in part) (“When two sovereigns have
legitimate authority to tax the same transaction, exercise
of that authority by one sovereign does not oust the juris-
diction of the other. If it were otherwise, we would not be
obligated to pay federal as well as state taxes on our in-
come or gasoline purchases. Economic burdens on the
competing sovereign . . . do not alter the concurrent nature6of the taxing authority”).
——————
6
These authorities also foreclose the Nation’s contention that theKansas motor fuel tax is invalid, irrespective of the applicability of
Bracker, 448 U. S. 136, because it interferes with the Nation’s right to
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18 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Opinion of the Court
B
Finally, the Nation contends that the Kansas motor fuel
tax is invalid notwithstanding the inapplicability of the
interest-balancing test, because it “exempts from taxation
fuel sold or delivered to all other sovereigns,” and is there-
fore impermissibly discriminatory. Brief for Respondent
17–20 (emphasis deleted); Kan. Stat. Ann. §§79–
3408(d)(1)–(2) (2003 Cum. Supp.). But the Nation is not
similarly situated to the sovereigns exempted from the
Kansas fuel tax. While Kansas uses the proceeds from its
fuel tax to pay for a significant portion of the costs of
maintaining the roads and bridges on the Nation’s reser-
vation, including the main highway used by the Nation’s
casino patrons, Kansas offers no such services to the sev-
eral States or the Federal Government. Moreover, to the
extent Kansas fuel retailers bear the cost of the fuel tax,
that burden falls equally upon all retailers within the
State regardless of whether those retailers are located on
an Indian reservation. Accordingly, the Kansas motor fuel
tax is not impermissibly discriminatory.
* * *
For the foregoing reasons, we hold that the Kansasmotor fuel tax is a nondiscriminatory tax imposed on an
off-reservation transaction between non-Indians. Accord-
ingly, the tax is valid and poses no affront to the Nation’s
sovereignty. The judgment of the Court of Appeals is
reversed.
It is so ordered.
—————— self government. See Brief for Respondent 45–47.
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_________________
_________________
1Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
SUPREME COURT OF THE UNITED STATES
No. 04–631
JOAN WAGNON, SECRETARY, KANSAS DEPART-
MENT OF REVENUE, PETITIONER v. PRAIRIE
BAND POTAWATOMI NATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[December 6, 2005]
JUSTICE GINSBURG, with whom JUSTICE K ENNEDY joins,
dissenting.
The Kansas fuel tax at issue is imposed on distributors,
passed on to retailers, and ultimately paid by gas station
customers. Out-of-state sales are exempt, as are sales to
other distributors, the United States, and U. S. Govern-
ment contractors. Fuel lost or destroyed, and thus not
sold, is also exempt. But no statutory exception attends
sales to Indian tribes or their members. Kan. Stat. Ann.
§§79–3408; 79–3409; 79–3417 (1997 and 2003 Cum. Supp.).
The Prairie Band Potawatomi Nation (hereinafter Na-
tion) maintains a casino and related facilities on its reser-
vation. On nearby tribal land, as an adjunct to its casino,
the Nation built, owns, and operates a gas station known
as the Nation Station. Some 73% of the Nation Station’s
customers are casino patrons or employees. Prairie Band
Potawatomi Nation v. Richards, 379 F. 3d 979, 982 (CA10
2004). The Nation imposes its own tax on fuel sold at the
Nation Station, pennies per gallon less than Kansas’ tax.1Ibid.
——————
1 The Federal Government also imposes a tax on the “removal, entry,
or sale” of all motor fuel. 26 U. S. C. §4081(a)(1). Neither the State northe Nation contests the applicability of this tax to fuel destined for the
Nation Station.
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2 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
Both the Nation and the State have authority to tax fuel
sales at the Nation Station. See Merrion v. Jicarilla
Apache Tribe, 455 U. S. 130, 137 (1982) (describing “[t]he
power to tax [as] an essential attribute of Indian sover-
eignty[,] . . . a necessary instrument of self-government
and territorial management,” which “enables a tribal
government to raise revenues for its essential services”).
As a practical matter, however, the two tolls cannot coex-
ist. 379 F. 3d, at 986. If the Nation imposes its tax on top
of Kansas’ tax, then unless the Nation operates the Nation
Station at a substantial loss, scarcely anyone will fill up at
its pumps. Effectively double-taxed, the Nation Stationmust operate as an unprofitable venture, or not at all. In
these circumstances, which tax is paramount? Applying
the interest-balancing approach described in White Moun-
tain Apache Tribe v. Bracker, 448 U. S. 136 (1980), the
Court of Appeals for the Tenth Circuit held that “the
Kansas tax, as applied here, is preempted because it is
incompatible with and outweighed by the strong tribal and
federal interests against the tax.” 379 F. 3d, at 983. I
agree and would affirm the Court of Appeals’ judgment.
I
Understanding Bracker is key to the inquiry here.
Bracker addressed the question whether a State should be
preempted from collecting otherwise lawful taxes from
non-Indians in view of the burden consequently imposed
upon a Tribe or its members. In that case, Arizona sought
to enforce its fuel-use and vehicle-license taxes against a
non-Indian enterprise that contracted with the White
Mountain Apache Tribe to harvest timber from reserva-
tion forests. 448 U. S., at 138–140. The Court recognized
that Arizona’s levies raised difficult questions concerning
“the boundaries between state regulatory authority and
tribal self-government.” Id., at 141. Determining whethertaxes formally imposed on non-Indians are preempted, the
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3Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
Court instructed, should not turn “on mechanical or abso-
lute conceptions of state or tribal sovereignty, but [calls]
for a particularized inquiry into the nature of the state,
federal, and tribal interests at stake.” Id., at 145. This
inquiry is “designed to determine whether, in the specific
context, the exercise of state authority would violate fed-
eral law,” ibid., or “unlawfully infringe ‘on the right of
reservation Indians to make their own laws and be ruled
by them,’ ” id., at 142 (quoting Williams v. Lee, 358 U. S.
217, 220 (1959)). Applying the interest-balancing ap-
proach, the Court concluded that “the proposed exercise of
state authority [was] impermissible” because “it [was]undisputed that the economic burden of the asserted taxes
will ultimately fall on the Tribe,” “the Federal Govern-
ment has undertaken comprehensive regulation of the
harvesting and sale of tribal timber,” and the state offi-
cials were “unable to justify the taxes except in terms of a
generalized interest in raising revenue.” 448 U. S., at 151.
The Court has repeatedly applied the interest-balancing
approach described in Bracker in evaluating claims that
state taxes levied on non-Indians should be preempted
because they undermine tribal and federal interests.2 In
many cases, both pre- and post- Bracker, a balancinganalysis has yielded a decision upholding application of
the state tax in question. See, e.g ., Cotton Petroleum Corp.
v. New Mexico, 490 U. S. 163, 183–187 (1989) (State permit-
ted to impose a severance tax on a non-Indian company that
leased tribal land for oil and gas production); Washington v.
Confederated Tribes of Colville Reservation, 447 U. S. 134,
——————
2 The Court has also applied the interest-balancing approach to other
forms of state regulation relating to Indian tribal societies. See, e.g .,
California v. Cabazon Band of Mission Indians, 480 U. S. 202, 216–217
(1987) (State prohibited from regulating non-Indian customers of tribal
bingo operation); New Mexico v. Mescalero Apache Tribe, 462 U. S. 324,333–343 (1983) (Mescalero II ) (State barred from enforcing game laws
against non-Indians for on-reservation hunting and fishing).
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4 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
154–159 (1980) (State permitted to tax non-Indians’ pur-
chases of cigarettes from on-reservation tribal retailers);
Moe v. Confederated Salish and Kootenai Tribes of Flathead
Reservation, 425 U. S. 463, 481–483 (1976) (same). Some-
times, however, particularized inquiry has resulted in a
holding that federal or tribal interests are superior. See,
e.g ., Ramah Navajo School Bd., Inc. v. Bureau of Revenue of
N. M., 458 U. S. 832, 843–846 (1982) (State prohibited from
imposing gross-receipts tax on a non-Indian contractor
constructing an on-reservation tribal school).
Kansas contends that the interest-balancing approach is
not suitably employed to assess its fuel tax for these rea-sons: (1) the Kansas Legislature imposed the legal inci-
dence of the tax on the distributor—here, a non-Indian
enterprise—not on retailers or their customers; and (2) the
distributor’s liability is triggered when it receives fuel
from its supplier—a transaction that occurs off-
reservation. Reply Brief 2–6. Given these circumstances,
Kansas urges and the Court accepts, no balancing is in
order. See ante, at 12–13; Brief for Petitioner 6, 14–21. It
is irrelevant in the State’s calculus that its approach
would effectively nullify the tribal fuel tax.
I note first that Kansas’ placement of the legal incidenceof the fuel tax is not as clear and certain as the State
suggests and the Court holds. True, the statute states
that “the incidence of this tax is imposed on the distributor
of the first receipt of the motor fuel.” Kan. Stat. Ann. §79–
3408(c) (2003 Cum. Supp.). But the statute declares ini-
tially that the tax “is hereby imposed on the use, sale or
delivery of all motor vehicle fuels . . . used, sold or deliv-
ered in this state for any purpose whatsoever,” §79–
3408(a), and it authorizes distributors to pass on the tax to
retailers, §79–3409. Notably, the statute excludes from
taxation several “transactions,” including the “sale or
delivery of motor-vehicle fuel . . . for export from the stateof Kansas to any other state or territory or to any foreign
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5Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
country”; “sale or delivery . . . to the United States”; “sale
or delivery . . . to a contractor for use in performing work
for the United States”; and “sale or delivery . . . to another
duly licensed distributor.” §79–3408(d). Kansas also
excludes from taxation “lost or destroyed” fuel, which is
never sold by the distributor. §79–3417 (1997). These
provisions indicate not only that the Kansas Legislature
anticipated that distributors would shift the tax burden
further downstream. They reveal as well where the
Court’s analysis of the fuel tax goes awry.
When all the exclusions are netted out, the Kansas tax
is imposed not on all the distributor’s receipts, but effec-tively only on fuel actually resold by the distributor to an
in-state nonexempt purchaser. To illustrate: Suppose in
January a distributor acquires 100,000 gallons of fuel and
promptly sells 80,000 to in-state nonexempt purchasers
and 20,000 to exempt purchasers, for example, the United
States or a U. S. contractor. The distributor would com-
pute its tax liability by “deducting” the 20,000 gallons, see
ante, at 11, n. 3, but would remit tax only on the 80,000
gallons bought by in-state nonexempt retailers.3 If the
distributor elected to build inventory in January by hold-
ing an additional 10,000 gallons for resale in February,Kansas would tax in January, but the distributor would
effectively offset in February the tax paid in January on
the inventory buildup. Again, in the end, only fuel actu-
——————
3 The Court analogizes the fuel excise tax “deduction” of exempt sales
to the federal income tax deduction for home mortgage interest. Ante,
at 12. The analogy is misconceived. An excise tax “deduction” bears no
realistic resemblance to a personal income tax deduction provided by
Congress for a nonbusiness personal expense. An excise tax “deduc-
tion,” however, may fairly be compared to the standard income tax
treatment of merchandise returns. In any period, goods returned and
held for resale offset goods sold, so that only net sales yield gross profits
for taxation purposes. See 26 CFR §1.446–1(a)(4)(i) (2005); cf. §1.458– 1(g) (adjustments under elective treatment of certain post-year-end
returns of magazines, paperback books, and recordings).
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6 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
ally sold to in-state nonexempt buyers would be burdened
by Kansas’ fuel tax.4
Kansas’ attribution of controlling effect to the formal
legal incidence of the tax rests in part on the State’s mis-
reading of Oklahoma Tax Comm’n v. Chickasaw Nation,
515 U. S. 450 (1995). See Brief for Petitioner 8, 16–20. The
Court in that case distinguished instances in which the legal
incidence of a State’s excise tax rests on a Tribe or tribal
members, from instances in which the legal incidence rests
on non-Indians. When “the legal incidence . . . rests on a
tribe or on tribal members for sales made inside Indian
country,” the Court said, “the tax cannot be enforced absentclear congressional authorization.” 515 U. S., at 459. This
“bright-line standard,” id., at 460, is sensitive to the sover-
eign status of Indian Tribes, and reflects the Court’s recog-
nition that “tribal sovereignty is dependent on, and subordi-
nate to, only the Federal Government, not the States.”
Colville, 447 U. S., at 154.5
When a State places the legal incidence of its tax on
non-Indians, however, no similarly overt disrespect for a
Tribe’s independence and dignity is displayed. In cases of
this genre, Chickasaw Nation recognized, the Court has
resisted adoption of a categorical rule. In lieu of attribut-ing dispositive significance to the legal incidence, the
Court has focused on the particular levy, and has evalu-
ated the federal, state, and tribal interests at stake. 515
U. S., at 459; see Cotton Petroleum, 490 U. S., at 176 ——————
4 If in February, the 10,000 gallons were destroyed and thus not sold,
Kansas would nonetheless offset the fuel tax burden as Kan. Stat. Ann.
§79–3417 (1997) provides, because these gallons would never be sold to
in-state nonexempt buyers.5 The standard also accords with our repeated admonition that a State
may not “unlawfully infringe ‘on the right of reservation Indians to
make their own laws and be ruled by them.’ ” White Mountain Apache
Tribe v. Bracker, 448 U. S. 136, 142 (1980) (quoting Williams v. Lee, 358U. S. 217, 220 (1959)). Accord Mescalero II, 462 U. S., at 332–333;
McClanahan v. Arizona Tax Comm’n, 411 U. S. 164, 171–172 (1973).
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7Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
(Instead of a “mechanical or absolute” test, the Court has
“applied a flexible pre-emption analysis sensitive to the
particular facts and legislation involved. Each case ‘re-
quires a particularized examination of the relevant state,
federal, and tribal interests.’ ” (quoting Ramah, 458 U. S.,
at 838)).
Chickasaw Nation did observe that “if a State is unable
to enforce a tax because the legal incidence of the impost is
on Indians or Indian tribes, the State generally is free to
amend its law to shift the tax’s legal incidence.” 515 U. S.,
at 460. Kansas took the cue. After our decision in Chicka-
saw Nation, Kansas amended its fuel tax statute to statethat “the incidence of this tax is imposed on the distributor.”
Kan. Stat. Ann. §79–3408(c) (2003 Cum. Supp.); see 1998
Kan. Sess. Laws, ch. 96, §2, pp. 450–451; see also Kaul v.
Kansas Dept. of Revenue, 266 Kan. 464, 474, 970 P. 2d 60,
67 (1998).6
Kansas is mistaken, however, regarding the legal sig-
nificance of this shift. Chickasaw Nation clarified only
that a State could shift the legal incidence to non-Indians
so as to avoid the categorical bar applicable when a state
excise tax is imposed directly on a Tribe or tribal members
for on-reservation activity. 515 U. S., at 460. At the sametime, Chickasaw Nation indicated that a shift in the legal
incidence of the kind Kansas has legislated would trig-7ger—not foreclose—interest balancing. Ibid.
——————
6 As earlier observed, supra, at 4, Kansas retained the opening decla-
ration that the tax “is hereby imposed on the use, sale or delivery of all
motor vehicle fuels . . . used, sold or delivered in this state for any
purpose whatsover.” Kan. Stat. Ann. §79–3408(a) (2003 Cum. Supp.).7 The only “bright-line standard” Chickasaw Nation advanced is the
categorical bar on tolls imposed directly on Tribes or their members.
515 U. S., at 460. No doubt a tribal retailer may find an upstream state
tax on its suppliers less burdensome than a downstream tax on its
consumers. See ante, at 14, n. 5. But administrative ease is hardly thedispositive consideration. The Court has never limited interest-
balancing to state taxes imposed on the non-Indian consumers of tribal
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8 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
Kansas and the Court heavily rely upon Mescalero
Apache Tribe v. Jones, 411 U. S. 145 (1973) (Mescalero I ).
That case involved a ski resort operated by the Mescalero
Apache Tribe on off-reservation land leased from the
Federal Government. This Court upheld New Mexico’s
imposition of a tax on the gross receipts of the resort.
Balancing was not in order, the Court explained, because
the Tribe had ventured outside its own domain, and was
fairly treated, for gross receipts purposes, just as a non-
Indian enterprise would be. In such cases, the Court
observed, an express-preemption standard is appropri-
ately applied. As the Court put it: “Absent express federallaw to the contrary, Indians going beyond reservation
boundaries have generally been held subject to nondis-
criminatory state law otherwise applicable to all citizens
of the State.” Id., at 148–149. Accord Chickasaw Nation,
515 U. S., at 462–465 (State permitted to tax income of
tribal members residing outside Indian Country). Cases of
the Mescalero I kind, however, do not touch and concern
what is at issue in the instant case: taxes formally im-
posed on nonmembers that nonetheless burden on-
reservation tribal activity.
Conceding that “we have never addressed th[e] preciseissue” this case poses, the Court asserts that “our Indian
tax immunity cases counsel against” application of the
Bracker interest-balancing test to Kansas’ fuel tax as it
impacts on the Nation Station. Ante, at 13. The Court so
maintains on the ground that the Kansas fuel tax is im-
posed on a non-Indian and is unrelated to activity “on the
reservation.” Ante, at 12–16. As earlier explained, see
supra, at 6–7, one can demur to the assertion that the
—————— enterprises; it has also applied this approach to state regulation of the non-Indian suppliers of tribal enterprises. See, e.g ., Department of Taxation and Finance of N. Y. v. Milhelm Attea & Bros., 512 U. S. 61, 73– 75 (1994).
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9Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
legal incidence of the tax falls on the distributor, a nontri-
bal entity. With respect to sales and deliveries to the
Nation Station, however, the nontribal entity can indeed
be described as “engaged in [an on-reservation] transac-
tion with [a Tribe].” Arizona Dept. of Revenue v. Blaze
Constr. Co., 526 U. S. 32, 37 (1999).
The reservation destination of fuel purchased by the
Nation Station does not show the requisite engagement, in
the Court’s view, but I do not comprehend why. The des-
tination of the fuel counts not only under §79–3408(a)
(2003 Cum. Supp.) (fuel tax “is hereby imposed on . . . all
motor vehicle fuels . . . used, sold or delivered in thisstate”).8 To whom and where the distributor sells are the
criteria that determine the “transactions” on which “[n]o
tax is . . . imposed,” §79–3408(d), and, correspondingly, the
transactions on which the tax is imposed. As earlier
explained, see supra, at 4–6, the tax is in reality imposed
only on fuel actually resold by the distributor to an in-
state nonexempt purchaser. Here, that purchaser is the
Nation Station, plainly an on-reservation venture.9
——————
8 Because §79–3408(a) (2003 Cum. Supp.) does not aid the Court’s
theory that the State’s tax operates entirely off reservation, the Courtessentially reads the provision out of the statute, or treats it as harm-
less surplus. See ante, at 9.9 At the Court of Appeals level, the Nation presented no “starkly dif-
ferent interpretation of the statute.” Ante, at 8. This Court, in citing
Appellant’s Reply Brief 3 to the contrary, apparently failed to read on.
At page 12, the Reply Brief states: “The fact that the state tax is
technically imposed off-reservation on a non-Indian is not controlling.
The state tax is directed at and burdens reservation value.” Moreover,
it is surely putting words in the Nation’s mouth to assert that “[u]nder
the Nation’s view . . . any off-reservation tax imposed on the manufac-
ture or sale of any good imported by the Nation or one of its members
would be subject to interest balancing.” Ante, at 16. The Nation itself
expressly “does not contend . . . that a non-discriminatory, off-
reservation state tax of general applicability may be precluded simplybecause the tax has an adverse economic impact on a Tribe or its
members.” Brief for Respondent 1. As the Nation points out and the
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10 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
Balancing tests have been criticized as rudderless,
affording insufficient guidance to decisionmakers. See
Colville, 447 U. S., at 176 (Rehnquist, J., concurring in
part, concurring in result in part, and dissenting in part)
(criticizing the “case-by-case litigation which has plagued
this area of law”); Brief for Petitioner 30–32. Pointed as
the criticism may be, one must ask, as in life’s choices
generally, what is the alternative. “The principle of tribal
self-government, grounded in notions of inherent sover-
eignty and in congressional policies, seeks an accommoda-
tion between the interests of the Tribes and the Federal
Government, on the one hand, and those of the State, onthe other.” Colville, 447 U. S., at 156. No “bright-line”
test is capable of achieving such an accommodation with
respect to state taxes formally imposed on non-Indians,
but impacting on-reservation ventures. The one the Court
adopts inevitably means, so long as the State officially
places the burden on the non-Indian distributor in cases of
this order, the Tribe loses. Faute de mieux and absent
congressional instruction otherwise, I would adhere to
precedent calling for “a particularized inquiry into the
nature of the state, federal, and tribal interests at stake.”
Bracker, 448 U. S., at 145.II
I turn to the question whether the Court of Appeals
correctly balanced the competing interests in this case.
Kansas and the Nation both assert a substantial interest
in using their respective fuel taxes to raise revenue for
road maintenance. Weighing competing state and tribal
——————
Court of Appeals comprehended, “the actual issue presented here [is]
the permissibility of a state tax that effectively nullifies a Tribe’s power
to impose a comparable tax on fuel sold at market price by a tribally
owned, on-reservation gas station.” Ibid. (emphasis in the original); see Prairie Band Potawatomi Nation v. Richards, 379 F. 3d 979, 986 (CA10
2004).
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11Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
interests in raising revenue for public works, Colville
observed:
“While the Tribes do have an interest in raising reve-
nues for essential governmental programs, that inter-
est is strongest when the revenues are derived from
value generated on the reservation by activities in-
volving the Tribes and when the taxpayer is the re-
cipient of tribal services. The State also has a legiti-
mate governmental interest in raising revenues, and
that interest is likewise strongest when the tax is di-
rected at off-reservation value and when the taxpayer
is the recipient of state services.” 447 U. S., at 156–
157.
In Colville, it was “painfully apparent” that outsiders had
no reason to travel to Indian reservations to buy cigarettes
other than the bargain prices tribal smokeshops charged
by virtue of their claimed exemption from state taxation.
Id., at 154–155. The Court upheld the State of Washing-
ton’s taxes on cigarette purchases by nonmembers at
tribal smokeshops. No “principl[e] of federal Indian law,”
the Court said, “authorize[s] Indian tribes . . . to market
an exception from state taxation to persons who would
normally do their business elewhere.” Id., at 155.
This case, as the Court of Appeals recognized, bears
scant resemblance to Colville. “[I]n stark contrast to the
smokeshops in Colville,” the Nation here is not using its
asserted exemption from state taxation to lure non-
Indians onto its reservation. 379 F. 3d, at 985. The Na-
tion Station is not visible from the state highway, and it
advertises no exemption from the State’s fuel tax. Includ-
ing the Nation’s tax, the Nation Station sells fuel “‘within
2¢ per gallon of the price prevailing in the local market.’ ”
Id., at 982 (quoting the Nation’s expert’s report); see also
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12 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
App. 36–40.10 The Nation Station’s draw, therefore, is
neither price nor proximity to the highway; rather, the
Nation Station operates almost exclusively as an amenity
for people driving to and from the casino.
The Tenth Circuit regarded as valuable to its assess-
ment the opinion of the Nation’s expert, which concluded:
“ ‘[T]he Tribal and State taxes are mutually exclusive and
only one can be collected without reducing the [Nation
Station’s] fuel business to virtually zero.’ ” 379 F. 3d, at
986. Kansas “submitted [no] contradictory evidence” and
did not argue that the expert opinion offered by the Nation
was “either incorrect or exaggerated.” Ibid.11 In thisrespect, the case is indeed novel. It is the first case in
which a Tribe demonstrated below that the imposition of a
state tax would prevent the Tribe from imposing its own
tax. Cf. Cotton Petroleum, 490 U. S., at 185 (state and
tribal taxes were not mutually exclusive because “the
Tribe could, in fact, increase its taxes without adversely
affecting on-reservation oil and gas development”).
The Court of Appeals considered instructive this Court’s
decision in California v. Cabazon Band of Mission Indians,
480 U. S. 202 (1987). See 379 F. 3d, at 985. The Court
—————— 10 Tribes, it should be plain, cannot prevail in the interest-balancing
analysis simply because they tax the same product or activity that the
State seeks to tax. See Washington v. Confederated Tribes of Colville
Reservation, 447 U. S. 134, 156 (1980). Otherwise, “the Tribes could
impose a nominal tax and open chains of discount stores at reservation
borders, selling goods of all descriptions at deep discounts and drawing
custom from surrounding areas.” Id., at 155; see infra, at 15–16.11 At oral argument, it was suggested that the Nation Station might
pass on both taxes to its customers if it were willing to forgo some of its
profits. Tr. of Oral Arg. 3–6, 25–27, 48–50. This speculation appar-
ently did not take account of the opinion and explanation of the Na-
tion’s expert, which stands uncontradicted in the record developed in
the lower courts. Moreover, the Nation’s counsel informed the Court:
“[T]he [T]ribe is being forced right now to subsidize the sales at the[Nation S]tation at a loss, which it’s doing for the balance of this
litigation.” Id., at 25; cf. ante, at 17.
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Cite as: 546 U. S. ____ (2005) 13
GINSBURG, J., dissenting
there held that tribal and federal interests outweighed
state interests in regulating tribe-operated facilities for
bingo and other games. Cabazon, 480 U. S., at 219–220.
Distinguishing Colville, the Court pointed out that the
Tribes in Cabazon “[were] not merely importing a product
onto the reservatio[n] for immediate resale to non-
Indians”; they had “built modern facilities” and provided
“ancillary services” so that customers would come in in-
creasing numbers and “spend extended periods of time”
playing their “well-run games.” 480 U. S., at 219; see also
New Mexico v. Mescalero Apache Tribe, 462 U. S. 324, 327,
341 (1983) (Mescalero II ) (State barred from regulatinghunting and fishing on-reservation where the Tribe had
constructed a “resort complex” and developed wildlife and
land resources).
As in Cabazon, so here, the Nation Station is not “merely
importing a product onto the reservatio[n] for immediate
resale to non-Indians” at a stand-alone retail outlet. 480
U. S., at 219. Fuel sales at the Nation Station are “an
integral and essential part of the [Tribe’s] on-reservation
gaming enterprise.” 379 F. 3d, at 984. The Nation built
the Nation Station as a convenience for its casino patrons
and, but for the casino, there would be no market for fuelin this otherwise remote area. Id., at 982.
The Court of Appeals further emphasized that the Na-
tion’s “interests here are strengthened because of its need
to raise fuel revenues to construct and maintain reserva-
tion roads, bridges, and related infrastructure without
state assistance.” Id., at 985. The Nation’s fuel revenue
comes exclusively from the Nation Station, and that reve-
nue (approximately $300,000 annually) may be used only
for “ ‘constructing and maintaining roads, bridges and
rights-of-way located on or near the reservation.’ ” Id., at
985–986 (quoting Prairie Band Potawatomi Law and
Order Code §10–6–7 (2003)).The Nation’s interests coincide with “strong federal
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14 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
interests in promoting tribal economic development, tribal
self-sufficiency, and strong tribal governments.” 379
F. 3d, at 986. The United States points to the poor condi-
tion of Indian reservation roads, documented in federal
reports, conditions that affect not only driving safety, but
also the ability to furnish emergency medical, fire, and
police services on an expedited basis, transportation to
schools and jobs, and the advancement of economic activ-
ity critical to tribal self-sufficiency. Brief for United
States as Amicus Curiae 26; see, e.g., Dept. of Commerce,
Bureau of Indian Affairs, TEA–21 Reauthorization Re-
source Paper: Transportation Serving Native AmericanLands (May 2003). The shared interest of the Federal
Government and the Nation in improving reservation
roads is reflected in Department of the Interior regula-
tions implementing the Indian Reservation Roads Pro-
gram. See 69 Fed. Reg. 43090 (2004); 25 CFR §170 et seq.
(2005). The regulations aim at enhancing the ability of
tribal governments to promote road construction and
maintenance. They anticipate that Tribes will supplement
federal funds with their own revenues, including funds
gained from a “[t]ribal fuel tax.” §170.932(d). Because the
Nation’s roads are integrally related to its casino enter-prise, they also further federal interests in tribal economic
development advanced by the Indian Gaming Regulatory
Act, Pub. L. 100–497, 102 Stat. 2467, 25 U. S. C. §2701 et
seq.
Against these strong tribal and federal interests, Kan-
sas asserts only its “general interest in raising revenues.”
379 F. 3d, at 986. “Kansas’ interest,” as the Court of
Appeals observed, “is not at its strongest.” Id., at 987. By
effectively taxing the Nation Station, Kansas would be
deriving revenue “primarily from value generated on the
reservation” by the Nation’s casino. Ibid. Moreover, the
revenue Kansas would gain from applying its tax to fueldestined for the Nation Station appears insubstantial when
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15Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
compared with the total revenue ($6.1 billion in 2004) the
State annually collects through the tax. See id., at 982;
Brief for Respondent 12 (observing that “[t]he tax revenues
at issue—roughly $300,000 annually—are less than one-
tenth of one percent of the total state fuel tax revenues”).
The Court asserts that “Kansas uses the proceeds from
its fuel tax to pay for a significant portion of the costs of
maintaining the roads and bridges on the Nation’s reser-
vation.” Ante, at 18. The record reveals a different real-
ity. According to the affidavit of the Director of the Na-
tion’s Road and Bridge Department, Kansas and its
subdivisions have failed to provide proper maintenanceeven on their own roads running through the reservation.
App. 79. As a result, the Nation has had to assume re-
sponsibility for a steadily growing number of road miles
within the reservation (roughly 118 of the 212 total miles in
2000). Ibid.; see also Brief for Respondent 3, 40, 44–45. Of
greater significance, Kansas expends none of its fuel tax
revenue on the upkeep or improvement of tribally owned
reservation roads. 379 F. 3d, at 986–987; cf. Ramah, 458
U. S., at 843, n. 7 (“This case would be different if the State
were actively seeking tax revenues for the purpose of con-
structing, or assisting in the efforts to provide, adequate[tribal services].”). In contrast, Kansas sets aside a signifi-
cant percentage of its fuel tax revenues (over 40% in 1999)
for counties and localities. Kan. Stat. Ann. §79–3425
(2003 Cum. Supp.); see also §79–34,142 (1997) (prescrib-
ing allocation formula); 1999 Kan. Sess. Laws, ch. 137,
§37. And, as indicated earlier, supra, at 4–5, Kansas
accords the Nation no dispensation based on the Nation’s
sovereign status. The Nation thus receives neither a state
exemption so that it can impose its own fuel tax, nor a
share of the State’s fuel tax revenues. Accordingly, the net
result of invalidating Kansas’ tax as applied to fuel dis-
tributed to the Nation Station would be a somewhat moreequitable distribution of road maintenance revenues in
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16 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
GINSBURG, J., dissenting
Kansas.
Kansas argues that, were the Nation to prevail in this
case, nothing would stop the Nation from reducing its tax
in order to sell gas below the market price. Brief for Peti-
tioner 30. Colville should quell the State’s fears in this
regard. Were the Nation to pursue such a course, it would
be marketing an exemption, much as the smokeshops did
in Colville, and hence, interest balancing would likely
yield a judgment for the State. See 447 U. S., at 155–157.
In any event, as the Nation points out, the State could
guard against the risk that “Tribes will impose a ‘nominal
tax’ and sell goods at a deep discount on the reservation.”Brief for Respondent 34–35. The State could provide a
credit for any tribal tax imposed or enact a state tax that
applies only to the extent that the Nation fails to impose
an equivalent tribal tax. Id., at 35.
Today’s decision is particularly troubling because of the
cloud it casts over the most beneficial means to resolve
conflicts of this order. In Oklahoma Tax Comm’n v. Citizen
Band Potawatomi Tribe of Okla., 498 U. S. 505 (1991), the
Court counseled that States and Tribes may enter into
agreements establishing “a mutually satisfactory regime
for the collection of this sort of tax.” Id., at 514; see alsoNevada v. Hicks, 533 U. S. 353, 393 (2001) (O’CONNOR, J.,
concurring in part and concurring in judgment) (describing
various state-tribal agreements); Brief for United States as
Amicus Curiae 28–29, and n. 12; Brief for National Inter-
tribal Tax Alliance et al. as Amici Curiae; Ansson, State
Taxation of Non-Indians Who Do Business With Indian
Tribes: Why Several Recent Ninth Circuit Holdings Reem-
phasize the Need for Indian Tribes to Enter Into Taxation
Compacts With Their Respective States, 78 Ore. L. Rev.
501, 546 (1999) (“More than 200 Tribes in eighteen states
have resolved their taxation disputes by entering into inter-
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17Cite as: 546 U. S. ____ (2005)
GINSBURG, J., dissenting
governmental agreements.”).12 By truncating the balancing-
of-interests approach, the Court has diminished prospects
for cooperative efforts to achieve resolution of taxation
issues through constructive intergovernmental agreements.
In sum, the Nation operates the Nation Station in order
to provide a service for patrons at its casino without, in
any way, seeking to attract bargain hunters on the lookout
for cheap gas. Kansas’ collection of its tax on fuel destined
for the Nation Station will effectively nullify the Nation’s
tax, which funds critical reservation road-building pro-
grams, endeavors not aided by state funds. I resist that
unbalanced judgment.
* * *
For the reasons stated, I would affirm the judgment of
the Court of Appeals for the Tenth Circuit.
——————
12 In 1992, Kansas and the Nation negotiated an intergovernmental
tax compact. App. 20–26. When the initial five-year term expired, theState declined to renew the agreement. Brief for United States as
Amicus Curiae 3–4.